Question

Air pollution is an example of a. The underground economy. B. An external shock. C. A nonmarket activity. D. A negative externality.

Answer 1

Answer:

D. A negative externality.

Explanation:

Particulate pollution is a form of pollution that is responsible for the degradation of the environment.

Particulate matter is also referred to as particle pollution or atmospheric aerosol particles and it can be defined as a complex microscopic mixture of liquid droplets and solid particles that are suspended in air.

An externality is typically an unwarranted cost or benefit by a manufacturer or producer of goods and services that affects a third party.

In Economics, an externality could either be positive or negative depending on its effect on a third party.

A negative externality arises when the production or consumption of a finished product or service has negative impact (cost) on a third party.

In conclusion, air pollution is an example of a negative externality because it causes harm to a third party.